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Friday, December 21, 2012

I should start off by saying that if this feels a little conspiracy-theory-ish, that's because it is. I may be being too paranoid, but no one else is really talking about this, so I thought I would at least point it out.

Dedicated observers of the hot stove have been experiencing déjà vu this MLB offseason. If you've been feeling unlucky, it's not just in your head; the number "13" has popped up unusually frequently in final contract numbers:

Player

New Team

Dollars

Length

AAV

David Ortiz

Red Sox

$26 million

2 years

$13 million

Torii Hunter

Tigers

$26 million

2 years

$13 million

Dan Haren

Nationals

$13 million

1 year

$13 million

Mike Napoli

Red Sox

$39 million

3 years

$13 million

Shane Victorino

Red Sox

$39 million

3 years

$13 million

Ryan Dempster

Red Sox

$26.5 million

2 years

$13.25 million

Edwin Jackson

Cubs

$52 million

4 years

$13 million

This doesn't count Andy Pettitte (signed with the Yankees for one year, $12 million with incentives that could bring him to $13 million), Kevin Youkilis (signed with the Yankees for one year, $12 million), and RA Dickey (signed an extension with the Blue Jays for two years, $25 million).

What is going on here? At first, I figured it was a coincidence, but now I'm not so sure. There certainly seems to be an informal cap on the annual salaries given out to free agents this year. Oh, to be sure, elite free agents have broken the bank, such as Zack Greinke's $24.5 million AAV and Josh Hamilton's $25 million. Teams rightly have no problem breaking the magic barrier and doing everything in their power to secure a superstar—but the mid-level free agents have a very specific value on the free market, it seems.

This raises the question of whether it really is a free market. To be clear, I am not making an accusation—but any time the numbers line up like this, it raises the specter of collusion. Collusion may seem extreme and far-fetched, but it has been pretty common throughout baseball history, including recently, if you believe the MLBPA. It's actually not that outrageous of a possibility. What we know is that there has been an unusually high number of identically valued contracts this offseason, whether by secret, explicit arrangement between teams or an unspoken consensus around the league that $13 million is where the bidding stops.

In the mystery of whether there is anything deeper—or sinister—behind this study in numerology, a potential clue is the revamped system of free-agent compensation in the new CBA. (If you're not familiar with it, a good explanation is here.) The value of the "qualifying offers" that teams extend to their free agents under this system is calculated from the average of the 125 highest player salaries. In another eyebrow-raising coincidence, the value of a qualifying offer this year was $13.3 million.

There are numerous inferences to draw here. The simplest is that teams are simply trying to artificially depress the value of the qualifying offer (or at least keep it steady at roughly $13 million). That could be part of it, but there are also more complex forces potentially at play here.

To date, only five players (Josh Hamilton, Zack Greinke, BJ Upton, Aníbal Sánchez, and Hiroki Kuroda) have signed for higher AAVs than the value of a qualifying offer. Others (Nick Swisher, Michael Bourn, Kyle Lohse) figure to do so as well in the near future. All of these players were either extended qualifying offers or were not eligible for them (due to being traded midseason). In contrast, no player who didn't receive a qualifying offer is expected to get a higher AAV than $13 million.

Indeed, that's exactly what they have been getting: $13 million per year. That's a sign that maybe the market for non-qualifying-offer players is still strong—perhaps strong enough to reach $14 million or $15 million if unencumbered. But teams have an incentive to encumber—and to set the "ceiling" for these B-level free agents' salaries at a number just a tad below the value of a qualifying offer.

The incentive is to discourage other teams from making qualifying offers in the future. If any non-qualifying-offer free agent did receive a contract bigger than $13.3 million, teams would take note of this missed opportunity to gain a draft pick and might be more liberal in extending qualifying offers after 2013 or 2014. A given team doesn't want the other 29 to realize and do that, however, because it means that it would have to give up a draft pick if it wanted to sign that free agent. The fewer qualifying offers that are extended, the more aggressive teams can be on the free-agent market because the fewer draft picks they'll lose in doing so.

This scenario assumes that the clump of contracts around $13 million is meant to influence other teams' decisions on extending qualifying offers. But it could also be a way to influence players' decisions on whether to accept them.

Say MLB teams are all colluding to keep non-qualifying-offer free agents at AAVs under $13.3 million. The flip side of that is that teams are allowed to go berserk over qualifying-offer free agents; they're the only ones left to throw money at. This ensures that no qualifying-offer free agent ever settles for an AAV less than $13.3 million. Then, in future years, players who receive qualifying offers look at the history of past free agents in the same position and see that they would be stupid to accept one year at "only" $13.3 million. It then becomes easier for teams to extend qualifying offers—and thus easier to secure an extra draft pick—with less of a fear that their players will accept the offer, which the team may not truly be interested in paying.

This is a rather opposite scenario from the other; both seem like plausible possibilities, though. I'm sure others, even more complicated, could be thought up too. I don't presume to know the real reason for the cluster at $13 million, and, again, I'm not making a specific accusation. It's worth some very critical thought, though.